Mickey Mouse was born in 1928, shown here in the film short, 'Steamboat Willie,' which debuted in New York.

In the 1930s, in the depths of the Depression, a new kind of economics began to emerge from an unlikely source: a cartoon character named Mickey Mouse and his animated friends. Mickey was the creation of a young Los Angeles-based artist named Walt Disney. Along with partner Ub Iwerks, Disney had bounced around Hollywood and New York with some fits and starts, but no real major successes. Then in 1928 the two artists tried a new mouse character in place of an earlier Disney rabbit named Oswald, which Universal Studios claimed as their property. Thereafter, Disney vowed to secure his inventions, and he and his partner created a new mouse character. Disney first thought to name his mouse “Mortimer,” but his wife Lillian suggested “Mickey” to his and history’s good fortune. Disney and Iwerks first introduced the Mickey Mouse cartoon character to the world in a May 1928 silent short titled Plane Crazy. That first cartoon was not a success, as Disney then lacked the needed distribution channels. But the next cartoon released in November 1928, Steamboat Willie, was a success. A short film just under 8 minutes as most then were, Steamboat Willie was the first to synchronize sound with movement and character — in this case Mickey whistling as he piloted his boat.

Walt Disney and Ub Iwerks in early career.

Steamboat Willie met with great success among the movie-going public. Disney’s earlier Mickey cartoons were then reissued with sound, followed by a dozen new ones — all issued in 1929. Walt Disney Productions was formed that year as well, and the company began turning out the short, animated films — “shorts,” as they were called — on a regular basis. By 1932, Disney received a special Academy Award for the creation of Mickey Mouse, whose series was moved into color by 1935. Along the way, a cast of supporting animated characters were introduced in the Mickey films — Minnie Mouse, Horace Horsecollar, Clarabelle Cow, Donald Duck, Goofy, Pluto and others.

Disney 'Skeleton Dance' poster, 1929-30.

Alongside the Mickey Mouse series, Disney also produced short cartoon films called the “Silly Symphonies” that were, according to the Walt Disney Family Museum, “more daring, quirkier and more diverse” than anything in the Mickey Mouse series. Some of these films were also highly artistic, and helped bring notice to Disney & Co. on that level as well. Among the most famous and remembered of the Silly Symphonies are: The Skeleton Dance, Flowers and Trees, The Old Mill, and Three Little Pigs. Disney’s animated characters populated these shorts as well, including — Donald Duck, the Big Bad Wolf, Elmer Elephant, and Max Hare, among others. Still, it was Mickey Mouse who became Disney’s star, and it turned out, well beyond the movie houses.

Mickey “Multiplier”

America in the 1930s, however, was not in jovial state. Following the 1929 stock market crash, the economy deteriorated steadily. Through 1932, Herbert Hoover was president and he did not believe the federal government should become directly involved in fixing the economy. In 1933, shortly after President Roosevelt was elected and inaugurated, “New Deal” programs sought to stimulate the economy and provide jobs. Still, there was a long road ahead. Unemployment by then had reached historic levels, as the nation’s financial system teetered on the edge of collapse. In the midst of this, the country looked for any signs of optimism, recovery, and prosperity ahead. And some of that came from a surprising quarter — from Walt Disney’s animated creations. The short Mickey Mouse cartoons had become a hit with movie goers of all ages, and new films of Mickey and his friends were being churned out by Disney and his artists at a rate of about one per month. But most importantly for the 1930s, the cartoons were proving to be a business stimulus.

By 1935 Mickey Mouse and his friends had become a merchandising phenomenon. No less a cheerleader than the New York Times chronicled Mickey and Disney’s rising “multiplier role” in an otherwise bleak national economy. “New applause is heard for Mickey Mouse. . .”, wrote H.L. Robbins in the New York Times Magazine of March 1935.“The fresh cheering is for Mickey the Big Business Man, the world’s super-salesman. He finds work for jobless folk. He lifts corporations out of bank- ruptcy…” – The New York Times
March 1935 “The fresh cheering is for Mickey the Big Business Man, the world’s super-salesman. He finds work for jobless folk. He lifts corporations out of bankruptcy. Wherever he scampers, here or overseas, the sun of prosperity breaks through the clouds.”

Indeed, through the 1930s, Mickey Mouse merchandising exploded; hundreds of products were available across the country and around the world. There were Mickey Mouse phonographs and radios; Mickey Mouse wrist-watches, satchels and briefcases. There was also Mickey Mouse soap, candy, playing-cards, hairbrushes, chinaware, alarm clocks, hot-water bottles, table covers and napkins, Mickey Mouse biscuits and dairy, Mickey Mouse book-ends, and of course, Mickey Mouse music. At least four publishers were then selling Mickey Mouse books, one of which in1934 had sold 2.4 million copies. Mickey Mouse pencils, paper, school notebooks, and tablets were sold by the million as well. Food-product companies “hired” Mickey to sell breakfast cereal and also used Madison Avenue advertising to tout their new friend. In England there was Mickey Mouse marmalade. New York’s Fifth Avenue sold Mickey Mouse charms and bracelets, some in gold and platinum, and a few with diamonds. A Cartier diamond bracelet sold for $1,200. Some department stores used Mickey Mouse window displays, which could cost $25,000 for a single display. By 1934, Mickey merchandise was earning about $600,000 a year.

Walt Disney Enterprises in the 1930s had its New York offices in the United Artists Building on 7th Avenue just off Times Square. Those offices, among other things, dealt with the licensing and commercial business that Mickey and his friends were generating. The first concession for a Mickey Mouse product, in 1930, had gone to a doll maker. Five years later there were eighty product-related licensees for Mickey and other Disney characters in the U.S., fifteen in Canada, fifteen in Australia, forty in England, eighty in other European counties. Disney Enterprises by then had branch offices in Chicago, Toronto, London, Paris, Copenhagen, Milan, Barcelona, Lisbon and Sydney. Mickey was becoming a burgeoning global business, and even kept a few companies from going bankrupt. Take the company that made a Mickey Mouse wrist watch.

The Mickey Mouse Watch was first made in mid-1933 by the Ingersoll-Waterbury Clock Company of Waterbury, Connecticut. The company’s financial condition at the time was not good, but the Mickey Mouse watch was offered for sale at an expensive $3.25, or about $52.00 in today’s money. Still, the response to the watch was somewhat favorable, even at that price. However, the market improved when Ingersoll-Waterbury reduced the price to $2.95, using some advertising to tout the new price (see below). In fact, the watch did well enough for Ingersoll-Waterbury that it is credited with helping to keepthe company afloat during the Depression. Ingersoll-Waterbury became “Timex” in the 1960s, continuing to produce Mickey and Minnie Mouse watches. Other companies have since become involved in making Mickey Mouse watches including Seiko, Fossil, Colibri, and Disney Time Works.

Mickey wrist watch ad, 1930s.

Lionel Trains was another company that was helped by Mickey in the 1930s. Lionel had been a very prosperous company that appeared to weather the initial blows of the 1929 stock market crash. But, the economic crisis soon caught up with the company, and by 1931 sales dropped dramatically at Lionel as Americans tightened their belts. In the 1930s, however, Lionel introduced the Mickey Mouse wind-up handcar toy that came with a box of its own track. The reaction to the toy caught Lionel by surprise. Selling for $1 or less ($16 in 2007 dollars), the company sold over 250,000 units in under four months and could not keep up with demand. The Mickey Mouse Handcar train toy would sell over one million units in three years. Still, even with Mickey’s success, Lionel would continue to struggle. Yet some credit this one toy with keeping the company from bankruptcy. The toy brought Lionel cash flow, positive business press, and access to funding for other profitable projects.

As Mickey Mouse products were having a positive effect throughout the economy of the 1930s, the bigger enterprise of Walt Disney Productions — and what would become its mainstay business and product well-spring for years to come — would be its feature-length animated motion pictures. And that too, began in the 1930s.

Mickey and Disney’s fortunes in the 1930s had risen primarily on the basis of its nine-minute cartoons. Granted, there were a number of them running in theaters regularly through the mid-1930s. But no major motion picture by Disney then existed. The first would come in late 1937 when Disney released a full-length animated film, Snow White and the Seven Dwarfs. Many wondered whether Disney would make money with so extravagant a production as Snow White, which took years to make and cost $2 million to produce — then an enormous expenditure. For a time, in fact, Snow White was dubbed “Disney’s Folly” — but not for long.

When it opened in Hollywood at the Carthay Circle Theater on December 21, 1937, one trade paper noted that “a picture capable of making happy kiddies out of the bluebloods of Hollywood… will captivate the plain population as perhaps no other motion picture ever has or will.” And it did.

Walt Disney on the cover of Time magazine, December 27, 1937, along with his seven new friends.

As Snow White and The Seven Dwarfs opened around the country, the general public couldn’t get enough of it. In New York, it opened at Radio City Music Hall in January 1938 and ran for five weeks, and could have gone longer except for prior contracts. No feature had then played the Music Hall for more than three weeks. ”If you miss it,” said film critic Frank S. Nugent of the ‘New York Times,’ ”you’ll be missing the ten best pictures of 1938.” Time magazine had featured Walt Disney on its December 27, 1937 cover showing Disney at his work desk along with studio miniatures of his new stars — the Seven Dwarfs.

By the spring of 1939, Snow White had earned an estimated worldwide gross of $10 million, then a sizeable fortune. But Snow White had also broken a barrier, going beyond cartoon shorts. No longer would animation be limited to a minor supporting role or one-reel shorts. Snow White was a clear signal that animation could become a major new business, as Disney’s subsequent films would prove. The success of Snow White, says the Disney Family Museum “was more than a gratifying success story — it was the gateway to a practically unlimited future.”

Even in 1938, Disney’s success was being viewed by some observers as a sign of something much bigger. By May 1938, the film had become such a merchandising success that the New York Times celebrated its economic impact, using the term “industrialized fantasy” in a positive way, touting the new business not only as a positive contributor to climbing out of the 1938 recession, but also as a promising new industry. Here’s the complete May 2, 1938 New York Times editorial: “Prosperity Out of Fantasy”:

“Prosperity Out of Fantasy”New York Times Editorial
May 2, 1938

It is said that what America needs to swing it out of the present economic tailspin is a new industry. Many things just over the horizon, such as television, air-conditioning in the home and flivver airplanes, have been suggested. But none of them seems yet to have materialized in terms of wages and heavy sales. Would it be ridiculous to suggest that industrialized fantasy may prove to be the answer?

Industrialized fantasy sounds like something extremely complex. Yet it is quite simple. Walt Disney’s picture-play “Snow White and the Seven Dwarfs” is an excellent example. Here is something manufactured out of practically nothing except some paint pots and a few tons of imagination. In this country imagination is supposed to be a commodity produced in unlimited quantities.“Figments of Disney’s imagination have already sold more than $2,000, 000 worth of toys since the first of the year.” If it can be turned out as an article of commerce which the public will readily buy, then prosperity should be-well, just around the corner, anyway. The Disney picture cost about $2,000,000 to produce.

To be sure, it gave employment to no flesh-and-blood actors, human attributes being confined to voices on the sound tracks. But it kept a small army of artists, animators and gag men busy for many months. And from all reports it will not only return more than this investment to Mr. Disney, but is showering fortune on every playhouse that shows it. Dopey, Grumpy and their fellow-dwarfs, despite the fact that they get no wages themselves, have been the most valiant miners and sappers against recession whom the moving picture magnates have hired this year. No mat ter what business may have been in most theaters, the exhibitors of “Snow White” have not had to layoff a single dwarf.

Moreover, the picture has virtually developed a new industry from its by-products. Figments of Disney’s imagination have already sold more than $2,000,000 worth of toys since the first of the year. Since January, says Kay Kamen, Mr. Disney’s representative here, 117 toy manufacturers have been licensed to use characters from “Snow White.” The only thing in the picture that the public doesn’t seem to crave is poisoned apples.

One factory in Akron, Ohio, which makes little rubber dwarfs, has been running twenty-four hours a day, while many of the other rubber factories are closed. Dopey and Grumpy are putting men to work in paint shops, box factories, silica mines, stone quarries and mills all over the map. Wherever they turn up, prosperity begins to radiate.”Snow White” is Disney’s first full-length picture. What is going to happen when he really gets into his stride? Industrialized fantasy? It should be industrially fantastic.

One of many 'Walt and Mickey' statues found throughout the Disney empire today.

New Kind of Commerce

Disney of the 1930s, of course, pales beside the Disney of today. But even in those early years, Disney’s “entertainments” were having a decided impact on the larger world. The Disney of the 1930s was not only helping to buoy a shaky American economy, it was also helping to build the foundation of something new — a global entertainment economy. As time would tell, this new kind of commerce would reverberate in jobs, finance, balance-of-trade and more, becoming a much bigger part of the national and global economies. It would also permeate popular culture and politics in new and more powerful ways.

Readers of this story may also find other business & entertainment history at this website of interest, including for example: “Dempsey vs. Carpentier, July 1921”(early radio & rise of sports entertainment biz); “Basketball Dollars, NCAA-2009”(sports & the ‘entertainment economy’); “Stones Gather Dollars, 1989-2008”(Rolling Stones & rise of much bigger rock concert biz); “Empire Newhouse, 1920s-2012” (Newhouse media & publishing history, from newspapers and magazines to Reddit.com); and “Disney’s Movie Vault, 1984-1998.”

The 1940 film Pinocchio wasn’t released for home video sale until 1985, when it first sold 600,000 copies.

In the early 1980s, as the home video market began to emerge, the Walt Disney Company was reluctant to release its classic animated movies for home use. The video market began primarily as a rental business, and later moved to sales. In 1983, the home video market was small, with only about 10 percent of U.S. homes having video cassette recorders (VCRs). Disney at the time was involved in limited rentals, and to a lesser extent, some sales of old cartoons and action films. But in 1985, none of the Disney classics such as Snow White (1938), Pinocchio (1940), Cinderella (1950) or Sleeping Beauty (1959) had been released for home video use — rental or sales. Disney kept these classics locked up in its vault, regarding them as a kind of Disney gold, only to be “marketed” through controlled release to movie theaters. It was Disney policy and economic strategy that these films should not be available for home rental or purchase. That philosophy would soon change, however, as Disney began to see — and became a primary force in creating — the huge and ever-expanding home video market. But first, consider the classic film Pinocchio as Disney struggled internally with the changing market in 1985.

Pinocchio’s Profits

Pinocchio had been released to theaters in 1945, 1954, 1962, 1971, 1978, and 1984. The strategy ingrained in the company was to release their classics to theaters every 7-to-10 years or so, and then back to the vault. That was about the right time interval according to Disney; time enough for a new generation to see the film for the first time. As the company then calculated, this limited exposure would be repeated for each new generation while preserving the film’s economic value. Releasing its classic films for sale on home video, went the company’s thinking at the time, would mean losing control of major assets by permanently moving them into the homes of millions of Americans. So Disney rationed its classic animated films — only to theaters.

This logic continued to reign at Disney until 1985 when an internal debate began over whether to release Pinocchio that summer on home video and how to price it. The continuing internal argument against home video release was that Disney would lose the value of the movie by selling it. A somewhat odd middle course to marketing the film was then taken: Disney would price the movie for sale at $79.95, a price so high that management figured people would rent it at a cheaper price rather than buying it. “The initial fear of diluting the value of our classics… began to pale beside the enormous profits we could earn…”+ -Michael Eisner, CEO Video stores, however, wouldn’t buy the film at that price. Disney then revised its plan in August 1985, pricing the Pinocchio VHS video for sale at $29.95. It sold 600,000 copies with only a modest marketing effort, suggesting to Disney there was a lot more market here than they first thought.

But the debate continued internally over the two strategies: home video sales vs. theater release only. There were still prominent voices within Disney for protecting the value of its classics. In November 1985, the next film to be considered was Sleeping Beauty (1959). The film had been released theatrically in 1970 and 1979 and was scheduled again for a theater release in 1986. But now it was also up for release as a home video. Again came the questions: “Could releasing the animated classics on video undermine their uniqueness by making them too widely available in viewers’ homes?” and, “Might such a move cheapen Disney’s image and undermine the brand?”

In 1986, Disney released the VHS edition of 'Sleeping Beauty' (1959).

Doing The Math

During the internal discussions, estimated revenues were offered for movie box-office returns vs. home video-sales. Releasing Sleeping Beauty four more times for theater-only showings over the next 28 years — i.e., once every seven years — would generate a total box office of $125 million. But a single home-video release of Sleeping Beauty in the near term would generate sales of at least $100 million. That quicker return, while a lower number, proved the more persuasive strategy since inflation would ravage the longer-term, theater-only box office returns. “The net present value of earning $125 million from Sleeping Beauty over the next twenty-eight years in theaters is less than $25 million,” concluded one of Disney’s analysts at the time. “It makes a lot more economic sense to earn $100 million from home video during the next six months.” And the money Disney earned from its video sales in the near term could be invested on other projects to produce further value for the company. The video sales strategy was the clear winner, and Disney began to push harder on this front with the Sleeping Beauty release.

The 1988 VHS of this 1950 Disney classic generated nearly 100 million in home video sales.

In the fall of 1986, Disney put up an unprecedented $7 million marketing campaign for the Sleeping Beauty video, priced at $29.95, using the theme “Bring Disney Home for Good” as part of its sales pitch. The campaign helped sell 1.3 million copies of the cassette, doubling the performance of Pinocchio and making Sleeping Beauty one of the largest-selling videos at the time. “The initial fear of diluting the value of our classics in future theatrical release began to pale beside the enormous profits we could earn immediately through home-video sales,” later explained Disney CEO Michael Eisner. “Nor did it cheapen Disney’s image in the marketplace. The best possible impact on our brand turned out to be having our classic films in people’s homes, where they were watched over and over.”

Cinderella Story

In 1988, the next Disney classic to come up for video release was the 1950 hit Cinderella. During the previous year in 1987, over the Christmas holidays, Cinderella had its latest scheduled movie theater release and had earned a respectable $34 million. But by this time Disney was also developing an improved strategy for marketing its home videos. It was now going beyond just the video stores. Disney began to link up with big mass-merchant retailers who had not previously sold home videos.In the late 1980s, Disney began to link up with big mass-merchant retailers like Target and Wal-Mart who had not previously sold home videos. Their first partner was Target but they soon joined with other big stores, including Caldor and Wal-Mart. By mid-year 1988, sales of the Cinderella video hit nearly 6 million copies, generating revenues of about $100 million, or nearly three times its previous years’ box office.

Disney further refined its video marketing network in 1989, eliminating middlemen and taking over distribution. Overhead costs came down, joint marketing campaigns were launched with large retailers, and computer-based accounting kept track of it all. The Jungle Book — a 1967 Disney film based on the Rudyard Kipling story, and the last film that Walt Disney himself had worked on before his death — was released on home video in 1991. It sold almost 9 million copies. Next up was 101 Dalmatians, a 1961 Disney film. Released on VHS for home vide sale in 1992, it sold more than 14 million copies.

'Snow White'-- 1994 VHS.

Snow White’s 50 Million

But even in the early 1990s there was still a reservoir of the old protective Disney at work, especially when it came to the classics Snow White and Fantasia, which Walt Disney himself had produced. Special care and restoration were taken with each of these films. The age of Fantasia left its color lacking, but with computerized technology, perfect color was restored, making the home video version better than the original. In its first release for the home market in 1991, Fantasia sold nearly 15 million copies. Snow White, Walt Disney’s first classic animated film released originally in 1937, was considered for home video release in the early 1990s. In this case, however, some external forces helped expedite the decision, as in Italy, the film was soon to move into the public domain, which meant it would be fair game for pirates and widespread copying. Snow White was released on VHS in 1994, and would break all records for Disney’s animated classics, selling nearly 50 million copies worldwide. The enormous market Disney discovered in selling older films, under- scored the “huge potential upside” in stepping up production of new ones.- Michael Eisner It was the last of the early Disney animated films released for home video. Disney was also able to extend the copyright for Snow White.

The success of Disney’s animated classics in the home video market, and the apparent good prospects for feature animation in the movie market generally, helped to bolster Disney’s resolve in the late 1980s to make more animated films.Michael Eisner put it this way: “The enormous [home] video market for our animated films prompted a second epiphany, namely, the huge potential upside to be realized in stepping up production of new animated films.” In the 1970s and early 1980s, the film-making process at Disney had become slow, turning out unremarkable products. And the films produced no longer seemed to have that Walt Disney quality. But after Michael Eisner arrived as CEO in the mid-1980s, things began to change.

CD cover, 'Roger Rabbit' soundtrack, 2002.

Enter Speilberg

In June 1988, Disney released Who Framed Roger Rabbit, a film that mixed live action with traditional animation — that is, “toon” characters played alongside real actors, marking a turn in the making of U.S. animated films. Disney teamed up with Stephen Speilberg’s Amblin Entertainment to make Roger Rabbit, which cost $70 million to produce, one of the most expensive films at the time. But the film earned over $150 million during its original U.S. theatrical release and more than twice that worldwide. Another film that year, Oliver & Co., loosely based on Oliver Twist, was also produced as a new animated feature and as a musical, reviving that format. It was released in late Novermber1988 and had an initial U.S. box office of more than $50 million, reaching nearly $75 million after a later second release. “In the aftermath of Oliver and Roger Rabbit,” says Michael Eisner, “we set a goal of producing one [animated film] every twelve to eighteen months.”

Disney’s
Animated Economics1988-1999

Film/Date

Global Gross

Who Framed Roger Rabbit
1988

$329,803,958

Oliver & Co.
1988

$75,000,000

The Little Mermaid1989

$222,300,000

Rescuers Down Under1990

$47,431,461

Beauty & The Beast1991

$403,476,931

Aladdin1992

$504,050,219

The Lion King1994

$783,841,776

Pocahontas1995

$347,179,773

Hunchback of Notre Dame
1996

$325,500,000

Hercules
1997

$252,712,101

Mulan1998

$304,320,254

Tarzan
1999

$448,191,819

A Very Good Decade

And Disney kept to that schedule over the next decade, producing a string of successful films, many of which were major hits: The Little Mermaid (1989), The Rescuers Down Under (1990), Beauty and the Beast (1991), Aladdin (1992), The Lion King (1994), Pocahontas (1995), The Hunchback of Notre Dame (1996), Hercules (1997), Mulan (1998), and Tarzan (1999).

In the process, Disney touched off something of renaissance in animated film-making through the 1990s, taken to new levels with computer-based production techniques, as well as new marketing joint ventures and merchandising tie-ins.

Disney’s feature animation depart- ment during that time underwent a significant expansion, rising from about 300 artists in 1988 to 2,400 by 1999. Also by this time, many of the Disney classics that had been released in earlier VHS format were now being released as DVDs and a new round of sales.

Today, of course, Disney’s animated film business is huge, both at the box office and in DVD sales. Many of its animated films have become the equivalent of stand-alone busi- nesses, each with related merchandising, music sales, and in the case of the Lion King, a Broadway production.

In 2006, Disney’s power in animated film making was made even more awesome with the $7.4 billion acquisition of Pixar, the computer-based film production company responsible for such animated blockbusters as Toy Story (1995, $354 million), Finding Nemo (2003, $864 million), and Cars (2006, $460 million). Yet in the brief space of about 15 years, dating from the mid-1980s, the entire business of animated film making and marketing was transformed, with Disney playing an important role in that process, in part, by taking a new look at its old assets.

See also at this website “Disney Dollars,” a story about Disney’s business during the Great Depression of the 1930s and the rising importance of entertainment in the U.S. economy. Additional stories related to Film & Hollywood topics can also be found at that category page. Thanks for visiting – and please consider supporting this website. Thank you. – Jack Doyle